The "derelict" former PCYC building in Turner will be demolished to make way for affordable rentals for essential workers.
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Canberra PCYC, CHC Australia and the Snow Foundation have proposed to develop 45 build-to-rent homes at the Watson Street site.
The joint venture has also proposed to develop 10 social housing units for people aged 16 to 24 years old and a social enterprise cafe on the site.
The ACT government will support the 45 build-to-rent homes through its $60 million affordable housing project fund, subject to planning approvals.
Build-to-rent housing refers to properties that are held in single ownership and rented out on a long-term basis.
The Turner build-to-rent homes would be made available at a discounted rate to essential workers such as nurses, emergency services workers, hospitality and retail workers.
Formerly a PCYC community hub, the building has sat vacant and vandalised for more than a decade.
In 2020, local street artists partnered with the ACT government to paint the walls with graffiti artworks.
Canberra PCYC president Peter Macfarlane said the project would not be possible without the support of the partners.
"This is a bit of a realisation of a vision that PCYC has had for quite a number of years to make use of what is a derelict site and turn it into something that will do good for the community," he said.
"A lot of pro bono work has gone into this. It just shows what the community can do."
Project to provide 'desperately needed' homes
Canberra PCYC CEO Cheryl O'Donnell said the organisation was delighted with the proposed redevelopment of the "under-utilised" site.
"The proposed remodelling will provide 55 units of desperately needed social and affordable housing," she said.
Ms O'Donnell said the project was a long time coming.
"We also acknowledge and extend our appreciation to the numerous local businesses who have volunteered their expertise to assist in realising this project," she said.
Snow Foundation CEO Georgina Byron said the collaborative approach was essential for the project's success.
"We are passionate about supporting this vital project, providing affordable rental accommodation and supported housing for at-risk youth in Canberra," she said.
The Snow Foundation was founded in 1991 by brothers Terry and George Snow and has contributed millions of dollars to support various causes.
The project is the latest to be supported by the ACT government's housing fund.
It will also support the construction of 54 affordable rentals in Curtin and 70 affordable rentals in Phillip.
The ACT government has also made a $4.5 million contribution to a women's build-to-rent-to-buy pilot program in Ginninderry.
Minister for Housing and Suburban Development Yvette Berry said the ACT government was committed to increasing housing supply and choice, especially for renters.
"Every Canberran deserves a roof over their head, whether they're a homeowner or a tenant," she said.
Ms Berry said there were two more announcements to come from the affordable housing project fund.